Oil ends higher, with U.S. prices up 16% for the quarter

By Myra P. Saefong and William Watts

Brent oil futures post a first-quarter gain of nearly 14%

Oil futures settled higher Thursday for the first time in three sessions to tally a solid gain for the quarter and a third straight monthly climb.

Official U.S. inventory figures released Wednesday showed a smaller rise in crude stocks than industry data had indicated, boosting prices for the session, while cuts in crude production so far this year by major oil producers helped support prices for the quarter, analysts said.

Price moves

West Texas Intermediate crude CL00 for May delivery CL.1 CLK24 rose $1.82, or 2.2%, to settle at $83.17 a barrel on the New York Mercantile Exchange. Front-month prices rose 6.3% for the month and gained 16.1% for the quarter, according to Dow Jones Market Data.May Brent crude BRNK24, the global benchmark, climbed $1.39, or 1.6%, to $87.48 a barrel on ICE Futures Europe, with prices up 4.6% for the month and posting a quarterly gain of 13.6%. June Brent BRN00 BRNM24, the most actively traded contract, rose $1.59, or 1.9%, to $87 a barrel.April gasoline RBJ24 added 2.9% to $2.76 a gallon, scoring a quarterly rise of 31.3%, while April heating oil HOJ24 tacked on 0.7% to $2.62 a gallon, up nearly 2.5% for the quarter. The April contracts expired at the end of the session. Natural gas for May delivery NGK24 settled at $1.76 per million British thermal units, up 2.6% Thursday. Prices fell 5.2% this month and dropped nearly 29.9% for the quarter.

Market movers

This has been a "comeback quarter" for oil, said Phil Flynn, senior market analyst at the Price Futures Group.

"The pessimism that permeated the oil prices when we entered this quarter seemed to dissipate, as the hard realities of supply and demand didn't fit the bearish narratives," he told MarketWatch.

Talk of a recession and the possibility that the Organization of the Petroleum Exporting Countries would not be able to follow through with its cuts "proved to be false," Flynn said. And while geopolitical risk factors have "not led to any major disruptions in oil supplies, they definitely have added to the cost of transportation" and made it "more difficult to procure supplies."

With the summer driving season ahead and the "strong seasonal tendency to see the prices of gasoline and crude oil rise, the political implications are going to start to become a topic for the political candidates going forward," he said. The possibility of a gasoline price spike is high, and he said there are questions about whether or not the Biden administration will be "tempted to reverse course and, instead of buying oil back for the Strategic Petroleum Reserve, actually tap it again to try to cool down prices."

Read: Oil could trade near $100 this year. Here's what could drag prices back down.

Oil futures ended lower on Wednesday but rose off session lows after the Energy Information Administration said U.S. crude inventories rose 3.2 million barrels last week. Analysts had forecast a decline, but the official data came in with a smaller increase than the increase of 9.3 million barrels reported by the American Petroleum Institute, an industry group, on Tuesday evening.

The API data meant the EIA reading "was almost a positive surprise, even though a decline had previously been expected," Barbara Lambrecht, commodity strategist at Commerzbank, said in a note.

Some support was also found from the EIA report's figures on gasoline demand, with continued improvement in the four-week average, Lambrecht said, while noting that the unsmoothed weekly figure fell for a second consecutive week and that gasoline inventories rose by 1.3 million barrels.

Read: Gas prices topping $4 a gallon this summer is possible - but not expected

Front-month prices for WTI and Brent oil posted strong gains for the quarter on Thursday, with markets closed for Good Friday.

Natural-gas futures, meanwhile, posted their largest quarterly decline since the first quarter of 2023.

Read: Natural-gas prices at lowest since 2020 on mild weather, ample supply 'double whammy'

On Thursday, data from the EIA showed that natural-gas supplies in storage fell by 36 billion cubic feet for the week ending March 22. On average, analysts had forecast a decline of 31 billion cubic feet, according to S&P Global Commodity Insights.

-Myra P. Saefong -William Watts

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03-28-24 1538ET

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